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China warns US on turning away investors
by Staff Writers
Washington (AFP) April 25, 2013

China's Huawei says US not 'key' market
Shanghai (AFP) April 25, 2013 - Chinese telecoms giant Huawei says it would no longer focus on the US market for its core business, months after Washington effectively closed the door on it by labelling it a security threat.

The US Congress last year warned telecom equipment supplied by Huawei and another Chinese company, ZTE, could be used for spying and called for their exclusion from government contracts and acquisitions.

Huawei has denied those claims and accused the US government of protectionism, while seeking to improve transparency by releasing annual reports despite not being a listed company, but to no effect.

"Considering the situation our company currently faces in the US, it would be very difficult for the US market to become a primary revenue source or a key growth area for our carrier network business in the foreseeable future," Huawei said in a statement.

The carrier network sector, in which it provides telecom companies with equipment and services to run their telecoms operations, is Huawei's main business.

A news report quoted Huawei's executive vice-president Eric Xu as telling analysts in a meeting at its headquarters in the southern Chinese city of Shenzhen on Tuesday that the firm had shifted away from the US over the past year.

"We are not interested in the US market any more," he was quoted as saying by the Financial Times.

A Huawei spokesman could not confirm the report.

But the statement, provided to AFP late Wednesday, said Xu's comment applied to its carrier network business, which derived growth mainly from developed markets outside the United States.

"In spite of this challenge, our US employees remain committed to providing quality services for our customers," it said.

Another Huawei executive said this month that the company still hoped to solve the "problems" it has in the United States.

"I believe one day we could potentially solve the challenges and problems in the US," said chief executive officer Guo Ping.

Huawei, which was founded by former Chinese army engineer Ren Zhengfei, was also barred from tendering for Australia's national broadband network last year on security grounds.

China on Thursday warned that the United States was turning away major investment from the growing Asian economy after several high-profile firms faced obstacles on security grounds.

Cui Tiankai, China's new ambassador in Washington, acknowledged that most investment in the United States was approved but said that Chinese companies keen to enter the world's largest economy were alarmed by several rejections.

"Sometimes the reasons offered are not so convincing. I am afraid that will affect investors' confidence and that will, in the long run, turn away some of the important investors," Cui told the Committee of 100, a Chinese American group.

Saying that Chinese investment created needed jobs in the United States, Cui complained that Washington had pressed Beijing to liberalize its economy when the Asian power was joining the World Trade Organization.

"Today it seems to me that this has been the banner of China. So what has been preached to us is not always practiced," he said.

"Unless we can remove such barriers from mutual investment, I'm afraid the prospect of mutual investment would be very negatively affected," he said.

Cui's remarks come after Chinese telecom giant Huawei said in a statement that it no longer considered the United States a primary market for revenue after lawmakers charged that the company posed a security threat.

A study by the US Congress last year said that equipment by Huawei and another Chinese company, ZTE, could be used for spying and called for their exclusion from government contracts and acquisitions.

Huawei has denied those claims and tried to show its transparency by releasing annual reports despite not being a listed company.

Despite the warnings, China invested a record $6.5 billion in the United States last year at a time that money flowing from distressed Europe waned, according to the Rhodium Group, which tracks Chinese investment.

The United States is also the most popular place for China to invest from its foreign reserves.

But a top official from China's sovereign wealth fund, which manages some $500 billion in assets, said that recent experiences made China feel unwelcome.

"For a time we thought it was what people would call a level playing field," Gao Xiqing, president and chief investment officer of the China Investment Corporation, told the same conference.

"Even though we thought, we have a little more money than most investors, we thought we would be treated the same as other people," he said.

Gao, without revealing details of a recent incident, said that he was "told that we are singled out" and "will be looked at differently than other investors."

The United States, which charges that China imposes its own barriers to foreign companies, says that it welcomes international investment but needs to ensure security.

In 2005, US concerns scuttled a bid by the state-owned China National Offshore Oil Corp. to take over US oil major Unocal.

More recently, President Barack Obama blocked a Chinese-led group from purchasing several wind farms near a US naval station, saying the acquisition threatened national security.


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